Your current lifestyle may impact your retirement more than you think.
Can it be sustained? How much money will it take to maintain the standards you're used to? What will it take in RRSPs, investments, savings and private and government pensions once retired?
"Understand how much it costs to keep the lifestyle that you are enjoying today and lock it in," says Patricia Lovett-Reid, senior vice-president of TD Waterhouse.
That sounds like a simple plan, but Ms. Lovett-Reid says many she talks to register a little shock when they hear that it could take $1-million to enjoy retirement as much as their working days.
Much of what's needed is driven by what people intend to do once they retire, says Ms. Lovett-Reid, who writes and speaks about personal finance. Planning should take into account the expenses they anticipate will result from their spending choices once their working days are over.
Portfolio manager Adrian Mastracci says most retired couples can live on $50,000 to $60,000 gross total income from various sources per year. It can be done on less, but might not be "pleasant," he says.
Mr. Mastracci says Canadians may not be saving enough for retirement, but he notes the economic climate as well as costs like housing and children that tend to eat up paycheques.
"I think we're a little too hard on a lot of investors," said Mr. Mastracci, of KCM Wealth Management Inc. in Vancouver.
Mr. Mastracci says he doesn't believe most will need the equivalent of 60 per cent to 70 per cent of their working salaries in retirement.
"What I buy into are the expenses you have. Chances are the expenses before retirement and after retirement aren't going to change very much, if any. Can you live on whatever that tells you?"
Ms. Lovett-Reid says 50 per cent of pre-retirement income is enough to lead a "modest" lifestyle in retirement. But she likes to use the 70 per cent rule. If the gross salary for the average couple is $63,900 at age 65, that couple would need to generate 70 per cent of that yearly in retirement.
For those going into retirement with consumer debt and mortgages, they're going to have to get "creative," said Gail Vaz-Oxlade, longtime financial writer and TV host.
That could mean getting a roommate, being a companion to an elderly person who doesn't get out much, working at a part-time job or selling your house to get out of debt, she said.
"Unfortunately, there have been people who have gone into retirement thinking they can behave as if they're still working," said Ms. Vaz-Oxlade, whose latest book "Never Too Late" offers advice for retirement planning to those who are unsure of how to get started.
As the March 1 deadline to make an RRSP contribution looms, Canadians will hear numerous cheerful advertisements from financial institutions about making their contributions so they can retire in style. But whatever vehicle you choose to invest in for the future, in the end it will need to produce enough to match your expectations, and that's what you should be thinking about right now.
"We were sold retirement as being the day you stop working and climb on a sailboat and head out into the Caribbean. But that's not what retirement is for 85 per cent of us," said Ms. Vaz-Oxlade.
"If you want to travel the world every year, you had better be socking away a ton of money."